KB Home reported fiscal 2025 fourth‑quarter revenue of $1.69 billion, a 15.3% decline from the $2.00 billion earned in the same period last year. GAAP diluted earnings per share were $1.55, while adjusted diluted EPS reached $1.92, beating the consensus estimate of $1.79 by $0.13 (7.3%). The adjusted EPS decline of 23.8% from $2.52 in Q4 2024 reflects the company’s exposure to a softer housing market.
The revenue drop was driven by a 9% decline in home deliveries and a 7% reduction in the average selling price, both of which eroded top‑line growth. Backlog value fell from $2.24 billion to $1.40 billion, and net new orders slipped 10% to 2,414 homes, underscoring the tightening demand environment.
Gross profit margins contracted to 17.0% from 20.9% in the prior year, while adjusted margins fell to 17.8% from 20.3%. The compression stems from price reductions, higher land costs, and a shift toward markets with lower price elasticity. Operating income fell in line with the margin squeeze, highlighting the impact of cost pressures on profitability.
Management guided fiscal 2026 revenue to $1.55 billion–$1.60 billion, down from the previous $1.70 billion–$1.75 billion range, and adjusted EPS guidance to $1.70–$1.75 versus $1.80–$1.85 previously. The cautious outlook reflects concerns about affordability, elevated mortgage rates, and ongoing margin pressure, signaling a conservative view of near‑term demand.
Capital allocation remained robust: a $100 million share repurchase was completed, and a $360 million term loan was extended to 2029. Total capital returned to shareholders exceeded $600 million in fiscal 2025, reinforcing the company’s commitment to disciplined capital deployment.
Investor reaction was muted, with market participants focusing on the cautious guidance and margin compression rather than the earnings beat. Analysts noted that while the adjusted EPS exceeded expectations, the broader outlook dampened enthusiasm for the company’s near‑term prospects.
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